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January 17 2013
No. 353
Gasoline Taxes and Tolls Pay for Only a
Third of State & Local Road Spending
Delaware Raises the Most from User Taxes and Fees; Alaska and Wyoming the Least
By
Joseph Henchman
A key issue for many state legislatures this year is transportation funding. Maryland Governor Martin
O'Malley (D) and Virginia Governor Bob McDonnell (R) have proposed sales tax increases for
transportation, Wyoming Governor Matt Mead (R) has proposed raising his state's second-lowest-in-the-
nation gasoline tax, and others have proposed new toll roads or the adoption of a vehicle mileage tax
(VMT) system.2
The lion's share of transportation funding should come from user taxes and fees, such as tolls, gasoline taxes,
and other user-related charges. When road funding comes from a mix of tolls and gas taxes, the people that
use the roads benefit from them and should bear a sizeable portion of the cost. By contrast, funding
transportation out of general revenue makes roads free, and consequently, overused or congested-often
the precise problem transportation spending programs are meant to solve.
Nationwide in 2010, state and local governments raised $37 billion in motor fuel taxes and $12 billion in
tolls and non-fuel taxes, but spent $155 billion on highways.3 In other words, highway user taxes and fees
1 For gasoline tax by state, see Nick Kasprak, Monday Map: State Gasoline Tax Rates, 2013, TAx FOUNDATION TAX POLICY BLOG,
Jan. 14, 2013, http://taxfondation org/blog/i odav- map-stare-pasolin, e-tax-rates-20 i3.
2 See, e.g., Andy Brownfield, O'Malley: Road funds may needgas or sales tax hike, WASHINGTON EXAMINER, Jan. 9, 2013,
hltp:/!bijiW0pFa ; Joseph Henchman & Scott Drenkard, Virginia Governor Proposes Smoke &Mirrors Transportation
Financing Plan, TAX FOUNDATION TAX POLICY BLOG, Jan. 8, 2013, h.jr,7bitlvlilrnk5b; Joan Barron, Wyoming House
committee advances fuel tax bill, CASPER STAR-TRIBUNE, Jan. 14, 2013, hrtp./ir.JybX('pGit: Michelle Boudin, Controversial toll
road planned to widen 1-77, NBC CHARLOTTE, Jan. 14, 2013, htto://bic.IyivW0pEDs; Becky Orr, 1-80 tolls run over, WYOMING
NEwS, Feb. 1, 2011, http;!/l)iti7vevE; WKBN, Lawmakers Criticize Kasich's Turnpike Plan, Dec. 18, 2012,
h-.q.: 4!dLbJX.L\Zia/ 11; Associated Press, State officials propose mileage tax for fuel-efficient vehicles in Oregon, Jan 2, 2013,
h-tp://bit. lvUA]MSG; Susan Fleming, Highway Trust Fund: Pilot Program Could Help Determine the Viability of Mileage Fees for
Certain Vehicles, U.S. GOVERNMENT ACCOUNTABILITY OFFICE REPORT (Dec. 2012),
hlttp://wvw.gao.gov /assets/660/65086 3.pd1.
' See U.S. Census Bureau, State and Local Government Finances by Level of Government and by State, 2009-10,
http:!w /wv. census.oviaovs/escinae/.](ViewImageLocal?handle=hein.taxfoundation/ffdfdxz0001&div=1&collection=&method=preview&ext=.png&size=3)